Final answer:
Charlie Corp. will make payments totaling $413,400 over six years for equipment costing $300,000. The interest paid over this period is the difference between these two amounts, which is $113,400.
Step-by-step explanation:
The question asks us to determine how much interest Charlie Corp. will pay over the term of the loan for new equipment. To find the total interest paid, we first calculate the total amount that will be paid over the six-year period. This is done by multiplying the annual payment amount by the number of years payments are being made.
Total payments = $68,900 × 6 = $413,400
Next, we subtract the original cash cost of the equipment from the total payments to determine the interest paid.
Interest paid = Total payments - Cash cost of equipment
Interest paid = $413,400 - $300,000 = $113,400
Therefore, the correct answer is (d) $113,400, which is the total interest that Charlie Corp. will pay over the term of the loan.